Pokemon, new King of the class – by Digitalis

Unless you’ve just came back from a holiday to Mars or have been living in a cave for the past week you most likely have heard of Pokémon Go by now – a free-to-play, augmented reality mobile game that’s been taking the world by storm.

Pokémon Go requires players to walk around looking through their smartphone cameras, waiting for them to show an image of a Pokémon superimposed onto the real world scene. The aim is to capture the creatures with a phone gesture. You can also go to Pokéstops – actual locations in the real world that double as places to get items and power-ups – and Pokémon gyms – where you can train the creatures to fight. You can make in-app purchases with real cash, which is how the game makes most of its revenue.

The game was launched only a week ago, yet it’s already registered more Android installs than Tinder, and is set to overtake Twitter in terms of active daily users, whilst Nintendo (which owns 32% of The Pokémon Company and is an investor in its developer, Niantic) saw its stock soar 23% in a day. Experts argue that what makes the game so phenomenally successful is that it has managed to nail the magic formula known as the game loop – engagement, retention, virality and monetization.

While some observers wonder how long it will be before the game follows in the footsteps of such long-forgotten fads as Pet Rocks and the Tamagotchi, others are musing on just how fantastically profitable Nintendo’s back catalogue can be. There is no reason why Animal Crossing, Zelda and Mario wouldn’t be able to replicate the success of Pokémon Go – particularly since location-based features are such a natural fit to all three. Market perceptions of Nintendo have been transformed in under a week.

The insane success of Pokémon GO has challenged conventional wisdom completely. Are location-based features far more potent money-making tools than anyone has realized? Could Eighties and Nineties nostalgia items be recycled a lot more effectively than they have been thus far?

In the meantime, whilst the game developers around the world watch in astonishment as Pokemania sweeps the planet and ad men are setting up emergency meetings to form ‘Pokémon-Go’ strategies, one particularly entrepreneurial pizza joint has already been using the crowd-gathering power of the game to their advantage.

As for Niantic, the company which developed the game, there’s a second component to their business model (the first being in-app purchases). The company’s CEO, John Hanke, has confirmed Niantic’s plans on letting advertisers create sponsored locations to drive both footfall and revenue. The aim is to cash in on the flood of Go players hunting for Pokémon out in the real world, as well as promoting brands within the game.

According to Hanke, sponsored locations serves as a model where advertisers “pay us to be locations within the virtual game board – the premise being that it is an inducement that drives foot traffic.”

Augmented reality is a technology that can be tricky to explain to someone who’s never experienced it. Now, thanks to Pokémon Go, augmented reality is no longer a niche concept that only the initiated would understand. The fact that millions of people are getting their first direct exposure and personal experience with augmented reality – simple though it may be – can’t help but be a boost to the future of this exciting new technology.

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